North Carolina Seeks an “All of the Above” Path to Reduce Emissions

What’s the issue?

The North Carolina legislature is considering a bill that its sponsors assert would modernize the state’s electric generation portfolio and will result, by 2030, in a reduction of electric power sector CO2 emissions of at least sixty-one percent as compared to 2005 levels.

Why does it matter?

North Carolina is very much a state that is in play for both parties, with a Democratic governor and a Republican-controlled legislature. The current bill being considered is described as an “all of the above” solution to the energy evolution. While a primary purpose of the bill is to direct the early retirement of a number of coal-fired power plants in the state, it purports to do that in a manner that will achieve emissions reductions and not cause a spike in power costs for consumers.

What’s our view?

The governor has urged members of his party to oppose the current bill. The bill still faces an uncertain path to enactment, but North Carolina is a key state to watch as an indicator of whether there is a centrist path forward that achieves emissions reductions while not relying solely on wind and solar to do so.

 


 

The North Carolina legislature is considering a bill that its sponsors assert would modernize the state’s electric generation portfolio and reduce CO2 emissions from the state’s electric generation industry by at least sixty-one percent by the end of 2030 as compared to 2005 levels. The sponsors of the bill describe it as an “all of the above” solution to the energy evolution. A primary purpose of the bill is to direct the early retirement of a number of coal-fired power plants in the state. The sponsors of the bill claim that it will be able to do that without causing a spike in power costs for consumers.

North Carolina is very much a state that is in play for both political parties. The state has a Democratic governor, but in the 2020 election, the Republicans maintained control of both chambers of the legislature, with a net gain of four seats in the House and a net loss of one seat in the Senate. The current bill being considered was introduced in the House and is currently pending in the Senate. The governor has urged members of his party to oppose the bill. The bill still faces an uncertain path to enactment, but North Carolina is a key state to watch as an indicator of whether there is a centrist path forward that achieves emissions reductions while not relying solely on wind and solar to do so.

 

North Carolina’s Generation Mix Has Been Changing

North Carolina, like many other states, has seen the mix of its electric generation changing over the last three decades. According to data from the U.S. Energy Information Administration, the state’s total electric generation has increased by over 60% since 1990, and the mix of fuel used to generate that power has been changing. In 1990, more than half of the electricity generated used coal as its fuel source, but by 2019, the last year for which information is available, coal-fired generation represents less than one-fourth of the total electricity generated.

 

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This conversion away from coal has also resulted in a substantial reduction in the GHG emissions resulting from electricity generation.

 

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As seen above, since 2005 when emissions were near their peak, the total emissions from electric generation is down by over 35%.

 

Pending Bill Would Further Reduce Reliance on Coal

One of the primary purposes of the bill is to require the retirement of slightly more than half of the state’s coal-fired power plants by no later than December 31, 2030.

 

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As seen above, under the bill, the coal-fired plants currently operating within the state would be retired more quickly than currently planned, but still almost half of the total nameplate capacity would remain in operation indefinitely.

 

Replacement Capacity

The sponsors of the bill assert that it is an “all of the above solution” because the bill calls for at least one of the coal plants being retired to be replaced with a 900 MW natural gas-fired facility at the same location. The bill also requires all utilities with greater than 150,000 customers to add over 4,667 MW of renewable energy resources by the end of 2026, or approximately 777 MW per year. While the language of the bill appears to be broadly applicable to all utilities of a certain size, the explanation of the bill provided in the North Carolina Senate makes it clear that this provision only applies to two utilities, Duke Energy Carolinas and Duke Energy Progress, which just happen to be the utilities that own the coal-fired plants that are being retired early.

 

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As seen above, such a goal is well within the historical records for addition of wind and solar generation within the state, and would require a substantial increase in the performance during the last few years, but is fairly consistent with what is already in operation or planned for this year and next.

 

Even Nuclear is Included

In many states, when talk turns to reducing emissions, environmental purists often object to the continued use of nuclear-powered plants and are even more opposed to the encouragement of new nuclear facilities, even though such plants have no carbon emissions. The North Carolina bill, therefore, is likely to draw the ire of such environmentalists because it not only requires Duke Energy to seek to renew the operating licenses for its existing nuclear facilities, but essentially pre-approves the collective expenditure of up to $50 million by all of the state’s electric public utilities to pursue an early site permit from the Nuclear Regulatory Commission for the siting of an advanced nuclear facility at a single location in the state.

 

Is Such a Centrist Path Still Viable?

Because of North Carolina’s purplish hue in the current polarized political environment, the passage or failure of this bill may be an indicator that an “all of the above” plan remains viable. The bill still has to win approval in the North Carolina Senate and be signed into law by the governor. There are also objections to the backing that the bill has received from Duke Energy because it is viewed as being overly friendly to Duke Energy’s economic interest. However, if such a bill cannot pass in a state in which both parties need to appeal to the center of the electorate, that will not bode well for similar paths to be adopted around the country. So even if you have no interest in North Carolina or Duke Energy, it is worth watching this bill as it works its way through the legislative process.

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